How to Sell Financial Model Templates

Spreadsheet template

We, eFinancialModels, makes it pretty easy to sell financial model templates as our website is targeted towards entrepreneurs, investors, and finance professionals. Once registered as a vendor, the vendor can easily submit his financial model templates on our platform.

In this article is a short guide on how you can better sell financial model templates with efinancialmodels.com. By pointing out the different related subjects, we’ll be able to give you some tips or ideas which can be useful once you start selling your financial model templates.

 

Who needs a Financial Model Template?

Financial models are needed for decision-making. They are prepared and used by:

  • Business and financial analysts
  • Management Executives, mostly CFOs, and CEOs
  • Entrepreneurs
  • Management consultants
  • Investors
  • Banks

Financial models always serve a specific purpose: E.g. investors want to find out what is the profitability of an envisaged investment, management wants to learn the expected cash flows of the business for planning purposes, investors and business owners want to obtain a valuation of a company or entrepreneurs need to figure out how they can optimally design their business model to create an interesting case for investors. There are many more applications as the possibilities and usefulness of financial models are nearly endless.

 

Why Users are interested in a Financial Model Template?

Before you build a financial model, lets shortly review the interests of the recipients on what they are looking for in a good template.

The general reason why financial model templates are being searched is that they can save significant time. Creating a financial model can easily turn into a very time-consuming exercise. Thus, it is worth the effort first to check if there is a suitable financial model template available. It is much faster to get the job done when starting off with a good template, rather than having to start from scratch.

Now let’s look specifically at what aspects of a financial model template users are particularly interested in:

  1. Industry Know-How: A good financial model template provides insights and expertise. As financial models depend on the particular use, the industry knowledge is very important. Each business has its drivers, but from a modeling perspective, normally each industry has some highly relevant aspects, which the model should address. Thus a good model contains the necessary industry know-how.
  2. Design and Structure: Some financial models might become hard to read, especially when they are very complex and extensive. Thus, at some point, the design and structure of such models become vital, as well-structured models are easier to understand and to update, especially when more than one person deals with the model. Therefore, financial modelers are constantly looking for new ways to better structure their models.

This shows that financial models can save significant time and thus, this gives a reason to purchase them rather than spending hours to build them themselves.

 

How to design a Great Financial Model Template

A financial model may be done quickly as the author normally already has an in-depth understanding of the use case and does not need to explain every detail. But, preparing a great financial model template is a bit different, as it needs to address the needs of other users, which might possess different levels of sophistication in financial modeling.

The general aspect when designing a model template is user friendliness. Everything, which makes the model user friendly, is a bonus and will be appreciated by the users. As users will be located in different countries, the model needs to offer some flexibility to easily adapt the model to any country or currency where it shall be used.

Therefore, we will provide below, a more detailed list of which aspects a good financial model template can benefit from.

  1. Currency – The currency should be easily changeable as users might be located in different countries and might use other currencies than the US Dollar (USD). One way to do that can is to have the three-digit currency code being inputted in the assumptions and the stated currency in the calculations referred to that.
  2. Starting Year – When a financial model explicitly uses years as column headers, they need to be updated as time goes by. One way to do that is also to put the starting year as input into the assumptions and make the other years dependent on that (e.g. Next Year = Start Year +1). For the past years, they can also make it dependent on the Starting Year (Past Year = Start Year -1).
  3. Inputs vs. Outputs – The author should be aware that for him, it’s easy to know which are the assumptions but for another reader, it might take a while to figure it out. A good model template should make it easy for the reader to understand which are the inputs and which are the outputs, to save time for them. There are different systems to do that e.g. by using different color codes for inputs and outputs, separating assumptions from the rest of the model, putting a very clear logic in place, etc. The author should just think about a way, on how to make it very easy for the user to understand his financial model template.
  4. Measurement units – In some industry, we have the situation that two measurement systems are being used, e.g. square meter and square foot for real estate. As you don’t know in which country the users of your financial model template will be situated, it can be a good idea to design the unit as input and link all references to that unit from this input. So, if a user needs square foot instead of square feet, it will be easier for him if he can just pull a switch and the unit is changed.
  5. Terms and Abbreviations – Especially industry-specific models sometimes use very distinct terms, which for the non-industry folks might not be clear, or are not that easy to be understood. A good practice is to put an abbreviations summary into a separate sheet in the model, where all the abbreviations and key terms are explained.
  6. User-friendliness – In general, the design should be user-friendly and be made for persons with different levels of experience. So, your template might need some additional tweaking to make it user-friendly than when using the model only by yourself.
  7. Detail vs. Complexity – Some model templates will be very detailed while others are more kept simple. There are pros and cons to each approach, but in general, it depends on the use case and the objectives of the model. If you need a very precise analysis, a more detailed model might better serve that purpose while if you just need a quick analysis about an investment case, a more high-level model might be quicker and be more useful to the reader.
  8. Consistency – A financial model should be designed in a consistent way. E.g. for real estate models, where you want to project cash flows for single plots as well the overall project, the calculations for plots and the overall project can be separated into different sheets in Excel. Thus, it’s important that on each sheet of those plots, the revenues and costs are always placed on the same row numbers and the years always use the same columns. Designing a model in such a way makes it much easier, to sum up, the yearly totals (always same column, same rows) and to review the model.
  9. Macros – While macros in Excel can be quite fancy and useful, the downside is that they function like a black box and they are mostly not fully transparent what they exactly do. Therefore, the model becomes more difficult to review and it can even become a source of error if the model is not fully understood. Keep in mind on Mac Book, some Macros might not work as they do in Windows. Macros should only be used in a minimalistic way and not to confuse the users.
  10. Circular references – Some analysts create models with leaving circular references in their models, e.g. by calculating the interest payment based on the average of the year ends. The problem is that the end year cash balance is output in most excel models. Thus, they solve it by using iterations. The problem with that approach now is that it becomes very tricky to figure out if the model does not have an error somewhere else and also running sensitivity analysis becomes nearly impossible because of the iterations. Therefore, for a model template, it is better to avoid it.

 

The above list is quite comprehensive, isn’t it? So, what should you do if your model template does not address all the above points? – The tip is to put out the first version even if the first version is not perfect. But once you receive downloads and users start to review and comment on the model, you can easily enhance your model template by uploading a next version which starts to address the above points.

 

How to Explain your Financial Model

When sharing or selling a model template on platforms such as efinancialmodels.com, the product description is key for a reader to decide whether to purchase the model template or not. Thus, we summarized the following tips on how to enhance your chances of getting more downloads:

  1. Stating the purpose – Users are looking for industry and financial modeling know-how and might not be familiar with all the benefits of your financial model. Therefore, it’s important to state the purpose and the benefits of using the model.
  2. Description – Users might not know what the purpose of the financial model is.  Provide a description of the functionalities of your model and the purpose it serves.
  3. Screenshots – The user wants to see what he is buying and get a feel of what the model will look like. Thus, it is best to add some screenshots to show what the user will get exactly.
  4. Demo Version – To offer even a better and interactive look and feel experience, you can provide two versions of the model. One, where the all the formula and output cells are protected (for free), and two, an unprotected version (paid).

    A quick tip in Excel: you can use the Format Cell feature to select those cells, which shall not be locked when protecting the Excel Sheet. Check MS Excel Forums to learn how to do that.

  5. Support – It is advisable to add your contact details inside the excel model where the user can ask for more support or get your help for advanced modeling work. Many times, users will have questions or require customization services. This can lead to interesting financial modeling projects and income for your business.

We hope that this guide provided you with some good guidance on how to prepare a financial model template to sell more. Kindly keep in mind, it doesn’t have to be perfect at the first time, what’s more important is to see how the model can also be improved with the feedbacks and interests received from the users.

 

How to Choose a Price for your Financial Model Template

The price Users are willing to pay depending on how big their problem is, which your Excel Template can solve for them. Thus, it’s a function on how difficult it is to find a similar template somewhere else, the time required to develop a template on their own and the design and usability of your Excel Model.

As a guide, based on our experience, financial model templates sell best with the following price ranges:

  • Single Excel models – USD 25.- to USD 35.- per Excel Template
  • Bundles/Packages and highly Complex Models USD 50.- to USD 100.- per Excel Template

Especially for higher priced models, itis important that the user can exactly understand what he will get when he purchases a model. Thus, we recommend, to provide a Free and a Paid version per model.

  • a FREE version where all formulas are protected (see instructions here) so interested Users can first see what they buy
  • a PAID version where all formulas are unprotected in Excel

 

How to Market your Financial Model Template

While visitors of eFinancialModels website will see your financial model, there is more you can do to promote it effectively.

  1. Contact people you know and tell them about the great financial model template you have created. There’s nothing wrong with self-marketing. Connections will get you somewhere, as well as help you take-oof the starting line.
  2. Share  Link via Social Networks. Use the share buttons on the page of your financial model template to share the link on your social networks such as LinkedIn, Facebook, Twitter, Google Plus, etc. It is very convenient nowadays that these tools are available, so you should take advantage of it and share your work.

Please feel free to comment below if you wish to add something or if you have any other tip to add that can be helpful for our users.